BHP positive after Olympic Dam extension

Peter Ker

BHP Billiton chief executive Marius Kloppers insists his company is ''very serious'' about finding an affordable way to expand its Olympic Dam mine, despite rejecting long-held expansion plans in August.

Mr Kloppers made the comments in Adelaide on Tuesday after winning a four-year extension to the legal agreement that sets the terms upon which BHP can expand its existing mine at Olympic Dam.

The extension was granted by South Australia's ruling Labor Party, but must pass both houses of SA Parliament before it is approved.

Greens MP Mark Parnell confirmed last night he would move to disallow the four-year extension in the Upper House of South Australian Parliament, saying the previous agreement was based upon mining methods that will not be part of any new model devised by BHP.

''If they want to come back with a different project we should renegotiate another deal with fresh eyes,'' he said.

The previous agreement was approved by the Upper House despite opposition from the Greens, and the extension will also be approved so long as both Labor and Liberal MP's support it.

Under the deal, BHP has agreed to spend $650 million in South Australia over the next four years on a range of topics, including technological research, environmental studies, development of the mining services sector in South Australia and indigenous projects.

BHP is trying to develop a cheaper way to expand Olympic Dam after the previous model for expansion was ruled to be uneconomic in August. The high cost of building mining projects in Australia was one of the factors that cruelled the previous expansion model, but Mr Kloppers said he was already seeing a reduction in costs across the Australian mining sector.

''Those costs are starting to mitigate … if the cost environment mitigates as current projects roll off, those are all going to obviously be enablers [to Olympic Dam going ahead],'' he said.

But Mr Kloppers was unable to guarantee that BHP would approve the expansion at the end of the four-year extension.

''All the parties here, specifically BHP Billiton, [are] working very hard to giving this project the best chance that it has got. We are committing over half a billion dollars in new technology in order to do so,'' he said.

''We wouldn't be doing so if we weren't very serious about making this a reality.''

Similar comments were made in October last year when BHP promised to spend $1.2 billion in ''pre-commitment'' spending on Olympic Dam as a condition of winning the first indenture agreement that was set to expire next month.

''We are very, very happy with the opportunity of this extension to continue to work the technologies that will enable this magnificent ore body to come into production,'' he said.

Mr Kloppers was not asked about his tenure as chief executive during the 23-minute press conference.

SA Premier Jay Weatherill said BHP had ''recommitted'' itself to South Australia.

"We have extended the indenture to allow BHPB to develop a revised plan, involving new and innovative ways of mining and processing,'' he said.